PXP Energy eager to resume South China Sea drilling

Philippine oil and gas firm PXP
Energy Corportion has expressed eagerness to resume exploration in the disputed
South China Sea and said any joint venture development would likely involve a
Chinese company.

PXP had been talking with China
National Offshore Oil Corp (CNOOC) about joint exploration and development of
the Reed Bank during the administration of President Rodrigo Duterte’s
predecessor, Benigno Aquino. But Manila’s move to seek arbitration disrupted
the negotiations.

Both countries are now open to the
idea of joint energy ventures in the disputed waters. China’s foreign minister
voiced his support during a visit last week to the Philippines, adding that
unilateral action could cause problems for both sides.

Such an arrangement would be
extremely complex and sensitive as both countries claim the oil and gas
reserves. Sharing them could be construed as legitimizing the other side’s
claim, or ceding sovereign territory.

Last week, Duterte said a partner
had been found for oil and gas exploration and development but gave no details.

Pangilinan said he had no idea who
Duterte was referring to, but believed “the joint venture (partner) will likely
be a Chinese company like CNOOC.”

“I’m not sure that a non-Chinese
company, at least in the beginning, would be involved because (the project) is
in the middle of a geopolitical issue between the Philippines and China,” he
said.

PXP has a 70 percent interest
through its Forum Energy subsidiary in the Reed Bank project, covered by a
Philippine permit called service contract 72 (SC72). It has a 50 percent
interest in a nearby project called SC75, which has also stalled because it is
within the disputed area.

Duterte, who took power shortly
before The Hague ruling, has said he will raise the landmark ruling with China
eventually but first needed to strengthen relations between the two countries.